The weeklong outage of Galileo services in mid-July seems like a textbook example of black swan theory: a surprise event that has a major effect and is often rationalized after the fact.

To date, official notifications of Galileo’s outage and its causes have been tardy and ambiguous, but the essential sequence of events is this:

The European GNSS Service Center (GSC) website posted a Notice Advisory to Galileo Users (NAGU) at 14:45 UTC (coordinated universal time) on July 11. The NAGU indicated that users might experience “service degradation” due to an “event” that had begun nearly 13 hours earlier, at 01:00 UTC.

Satellite signals apparently using outdated ephemerides—orbital positions of the spacecraft—or erroneous system time data were producing large errors in receiver calculations based on Galileo. For a prolonged period, however, the Galileo navigation messages identified the signals as healthy.

When Inside GNSS published the first news report on the outage (July 12), a source at the European GNSS Agency (GSA) indicated that Galileo system operators expected to have the problem resolved within 48 hours or no later than the July 13–14 weekend. The GSA is the European Union (EU) agency responsible for Galileo services.

In the event, the GSC did not post a NAGU announcing restoration of service until 08:20 UTC on July 18, although research centers, manufacturers and experienced users detected a gradual improvement in satellite signal quality beginning late on July 16.

In a July 18 announcement, the GSA attributed the signal anomalies to an equipment malfunction in Galileo’s dual Italian and German control centers that calculate time and orbit predictions, and which are used to compute the navigation message. The next day, an amended GSA statement attributed that malfunction to a more vaguely worded “ground infrastructure equipment.”

The Positives of Galileo

Now, before going any further, let me emphasize that the Galileo program has produced many benefits, not only for Europe, but also for users worldwide. These advantages include the training and employing of engineers, and significant advances in related sciences.

The program pioneered the use of passive hydrogen maser atomic clocks on board the Galileo In-Orbit Validation Element (GIOVE) satellites, first launched in 2005.

Galileo has introduced innovative services such as piggybacking search and rescue capabilities onto Galileo satellites and offering an encrypted service available to law enforcement, customs agencies and first responders, as well as to military users.

Politically, Europe introduced full civil control of a GNSS system from the outset, and the Galileo program has been crucial in helping forge closer strategic ties between the EU, the program manager and the European Space Agency, the technical lead.

And Yet…

Program managers have defended as useful redundancy what many consider an expensive system overbuilt to accommodate the political expectations of the large number of Galileo member-states. But that redundancy has apparently not eliminated all failure modes in the Galileo system.

In any case, the “technical incident,” as Galileo leaders characterize the outage, is not unprecedented. Any complex physical infrastructure will experience blips in performance. Russia’s GLONASS suffered a systemwide failure in April 2014 that took most of a day to resolve.

Even the Global Positioning System, the self-described “gold standard” of GNSS services, has experienced satellite signal anomalies, such as the SVN49 signal anomaly in 2008 as well as clock rollovers that throw some receivers off the track. However, part of what makes GPS “golden” is the high trust level invested in the system by users—due in no small part to the transparency and alacrity with which the U.S. Air Force and Coast Guard Navigation Center respond to such incidents.

The immediate practical consequences of the lengthy Galileo malfunction appear to have been small, because of the existence of other GNSS systems and their integration into multi-GNSS receivers that crosscheck the validity of the various signals.

In the longer term, however, the Galileo program faces trust issues for its failure to communicate the situation, its cause and its consequences in a prompt, clear and thorough manner.

Perhaps the larger lesson here is that it’s not a GPS world, or a Galileo world, or a GLONASS or BeiDou world—it’s a GNSS world. And we’re all the better for it.

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Ready for another round?

President Obama appears to have weighed in on the long-running Loran/eLoran debate — on the side of terminating the terrestrial radionavigation system and, apparently, its enhanced version that had been proposed as a backup to GPS.

In a February 26 message to U.S. Coast Guard (USCG) members, Vice-Admiral V. S. Crea, USCG Vice Commandant and Chief Operating Officer, said the Fiscal Year 2010 (FY10) budget outlined in a document sent to Congress calls for termination of Loran-C in the coming year.

Ready for another round?

President Obama appears to have weighed in on the long-running Loran/eLoran debate — on the side of terminating the terrestrial radionavigation system and, apparently, its enhanced version that had been proposed as a backup to GPS.

In a February 26 message to U.S. Coast Guard (USCG) members, Vice-Admiral V. S. Crea, USCG Vice Commandant and Chief Operating Officer, said the Fiscal Year 2010 (FY10) budget outlined in a document sent to Congress calls for termination of Loran-C in the coming year.

Specifically, Crea cited a passage from a section on potential savings across the federal government that proposed “the termination of outdated systems such as the terrestrial-based, long-range radionavigation (LORAN-C) operated by the U.S. Coast Guard resulting in an offset of $36 million in 2010 and $190 million over five years.”

During a question and answer period following his State of the Coast Guard address on March 3, the USCG Commandant, Admiral Thad Allen, was asked about the budgetary proposal that would “leave the nation without a primary backup to GPS.”

In his reply, Allen made a distinction between operating LORAN and a backup to GPS. “While one could be the other, it doesn’t necessarily have to be,” he said. “The policy decision was taken to terminate LORAN-C. Negotiations, discussions and outreach to stakeholders will continue for a requirement for a backup for GPS. Should that backup become eLORAN, that is something that will be addressed in the future.”

Noting that LORAN-C stations in Alaska are operating with 1960s vacuum-tube technology,” Allen called for an “up or down vote” on the system. Any requirements for a backup to GPS “need to be generated in the interagency [process],” Allen added, “and the Department of Homeland Security will have the lead on that effort.”

The Back Story
After efforts by several agencies to end the program in recent years, despite the recommendation of an Independent Assessment Team (IAT) that eLoran could serve as a backuup to GPS, the Department of Homeland Security (DHS) appeared to have embraced completing modernization of the system in former President Bush’s FY09 budget. (See the February 6 article on "2009 Budget Proposal Directs eLoran Implementation")

Language in the 2008 Federal Radionavigation Plan (FRP) released last month, however, made the status of the system appear a little ambiguous. (See the January 27 story on the 2008 FRP).

“Further details of the termination plan will be available upon the submission of the President’s full budget,” Crea said in his e-mail to Coast Guard members.

“The Commandant and I understand the uncertainty this planned termination creates among the highly dedicated men and women who operate and support our LORAN-C Stations, often under very challenging conditions,” Crea concluded. “We will ensure all Loran Station and program personnel are kept fully informed throughout this dynamic period.”

Despite its routine absence from administration budget proposals since 1994, Loran has been rescued by congressional advocates who have provided $160 million since 1997 to enhance the Loran system and conduct research to make eLoran a viable backup to GPS.

Those funds have helped modernize and add to the network of Loran transmitters that cover the United States, equipping every station with three cesium clocks, while encouraging miniaturization of Loran receiver technology able to use new all-in-view techniques that provide positioning and timing accuracy approaching that of GPS.

In a paper presented at the 2006 International Loran Association Convention and Technical Symposium, timing experts from the U.S. Naval Observatory, the National Institute of Standards and Technology, and a timing instrument manufacturer wrote, “[W]e have identified eLoran as potentially the best available backup provider to GPS as a reference source for precise time synchronization and frequency control.”

In August of that same year a white paper prepared for the Federal Aviation Administration, “GPS Backup For Position, Navigation and Timing,” endorsed eLoran as well.

The 11-member Loran IAT headed by Brad Parkinson, a Stanford University professor and founding program director for the GPS Joint Program Office, held a series of meetings with PNT equipment manufacturers and users to assess their ideas and sentiments about eLoran before unanimously endorsing the idea.

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Maybe it was just poor timing.

U.S. Transportation Secretary Ray LaHood’s passing comment that systems for assessing fees based on vehicle miles traveled (VMT) rather than gasoline taxes was quickly shot down by White House press secretary Robert Gibbs in a February 20 news conference.

On February 26, however, the congressionally mandated National Surface Transportation Infrastructure Financing Commission (NSTIFC) came out with a recommendation the United States should do exactly that — and pointed firmly to GNSS systems as a key enabling technology for accomplishing such a transition.

Maybe it was just poor timing.

U.S. Transportation Secretary Ray LaHood’s passing comment that systems for assessing fees based on vehicle miles traveled (VMT) rather than gasoline taxes was quickly shot down by White House press secretary Robert Gibbs in a February 20 news conference.

On February 26, however, the congressionally mandated National Surface Transportation Infrastructure Financing Commission (NSTIFC) came out with a recommendation the United States should do exactly that — and pointed firmly to GNSS systems as a key enabling technology for accomplishing such a transition.

The nation faces a crisis, the commission report opens ominously. “Our surface transportation system has deteriorated to such a degree that our safety, economic competitiveness, and quality of life are at risk.” And the commission believes that VMT could play an important role in providing the funding needed as gasoline taxes decline with more fuel-efficient vehicles, hybrid cars, and greater use of public transit.

On a closer reading (take note, Mr. Gibbs), the report’s conclusions and recommendations could resonate with such touchstones of the Obama administration as energy independence, encouragement of intelligent and green technologies, and reducing the nation’s “carbon foootrpint.”

In its report, “Paying Our Way, a New Framework for Transportation Finance,” recommendation I-8 states, “Congress should give U.S. [Department of Transportation, DoT] the authority and mandate to develop standards for VMT pricing technology and require original equipment manufacturers to install that technology by a date certain that will accommodate the desired 2020 comprehensive implementation.”

The NSTFC further suggests that, to the extent possible, VMT fee systems should be designed to ease integration with intelligent transportation systems (ITS), including traveler information systems. “It should, to the extent possible, also have the ability to integrate with existing vehicle GPS systems (such as GM’s OnStar system or after-market devices from companies like Garmin or TomTom),”

The report concludes that equipping all roads everywhere with the types of roadside equipment used in current electronic toll collection application would be far too costly. “Instead, most concepts for comprehensive pricing assume the use of an on-board unit [OBU] consisting of a GPS receiver, software, and a wireless communications capability,” the report notes.

Such a transition would be easier and cheaper, the commission observed, if the functional elements of such OBUs were mandated by the federal government prior to a decision about replacing fuel taxes with VMT charging. It suggested that this might take place under the auspices of the Vehicle Infrastructure Integration effort, which has been under way for a number of years among the Federal Highway Administration (FHwA), various state DoTs, major auto companies, and equipment vendors.

And, as the mobile phone industry has discovered, mandating GNSS installation on a platform can create synergistic effects. “[S]uch technology would provide other ancillary benefits to travelers, like GPS–assisted navigation.”

Established under the Safe, Accountable, Flexible, Efficient Transportation Equity Act signed into law on August 10, 2005, the 15-member commission was charged with investigating future highway needs, future transit needs, and the level of current and projected Federal Highway Trust Fund revenues and possible alternatives for funding it. The group was established two years ago with Robert D. Atkinson, president of the Information Technology and Innovation Foundation based in Washington, D.C., as its chairman.
Copies of the NSTIFC report are available on the U.S. Department of Transportation website.

Cost Issues
In addition to the technical feasibility of VMT-based systems, the commission spent a good deal of time considering the related cost variables as well as the issue of motorists’ privacy.

The report cites preliminary U.S. DoT research estimates that administrative costs for a national system of road pricing using GPS technology would be 1.7 percent of estimated revenues (equivalent to the cost of processing credit card transactions). “Although this is more than the cost of administering the current motor fuel taxes, estimated at 1.01 percent of revenues, it would still represent a comparatively inexpensive fee to administer.”

Mentioning such projects as Germany’s TollCollect system, the commission points out that the demands of modern toll roads have led to the development of new tolling technologies in recent years that facilitate dynamic pricing and open road tolling without the need for toll booths. “In addition, the cost and functionality of on-board GPS units have evolved to the point where they could facilitate the implementation of comprehensive pricing.”

The major limitation, the reported notes, is that current commercial-grade systems cannot reliably determine which lane a vehicle is in. However, “Next generation GPS satellite systems, however, could solve this problem.”

A second technical issue raised by the report is that GPS reception can be blocked or can produce “multipath” effects in urban areas with high-rise buildings and concluded that further research “is needed to understand the extent of these problems and possible solutions.”

Privacy Concerns
Commission members noted the “concern among policy makers and the general public that a road pricing system that charges based on when and where individuals travel inherently threatens privacy,” adding that “if these systems are not designed and implemented properly, the threat to privacy could be very real.”

Observing that a “great deal of thought has already gone into how a system could be structured to safeguard personal privacy,” the report cites projects in Oregon and Iowa that developed architectures preserving driver privacy.

And, in a welcome departure from the misconception that GNSS systems are inherently tracking systems, the report says, “The key point is that the [GPS] satellite signal is only a one-way signal ‘telling’ the car receiver where it is, and therefore outside the vehicle there is no tracking of where individuals travel. In essence, this receiving function of a VMT system would function like the GPS devices that millions of Americans have already installed in their cars without worry of privacy loss.”

In addition to a federal mileage-based fee system, the commission called for the federal government to facilitate state and local governments’ ability to raise their share of needed revenues in ways that also spur efficient use of the system and stepped-up investment. This could include tolling portions of roads and charging premiums for rush-hour travel in heavily used urban corridors, so-called congestion pricing.

In order to support the transition from the gas tax to a mileage-based charge, the NSTFC recommends a 10-cent per gallon increase in the federal gas tax (15 cents for diesel) and indexing the tax to inflation going forward.

Although the nearly $40 billion in transportation infrastructure spending included in the stimulus package recently passed by Congress will help, that allocation will cover only a very small share of the shortfall in highway and transit funding, according to the commission, and will not address the systemic crisis the nation faces in its surface transportation infrastructure investment.

As required by the law establishing the commission, its report now goes to LaHood’s office, as well as to the Secretary of the Treasury Timothy Geithner, and five congressional committees.

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u-blox has announced the immediate availability of a GPS “PCI Express Mini” card. The card enables laptops, netbooks, mobile Internet devices, and “Ultra Mobile” PC OEMs to provide GPS and location-based services such as personal navigation, services/people finder, and geo-tagging.

Sales of mobile PCs with integrated GPS are projected to grow from 3 million units in 2007 to 45 million units in 2011, according to the company.

u-blox has announced the immediate availability of a GPS “PCI Express Mini” card. The card enables laptops, netbooks, mobile Internet devices, and “Ultra Mobile” PC OEMs to provide GPS and location-based services such as personal navigation, services/people finder, and geo-tagging.

Sales of mobile PCs with integrated GPS are projected to grow from 3 million units in 2007 to 45 million units in 2011, according to the company.

The PCI Express Mini Card is based on the company’s u-blox 5 positioning engine. Requiring only an external antenna, the card comes in two sizes — PCI-Express Mini Card (PCI-5S) and PCI-Express Half Mini Card (PCM-5S). The cards implement u blox’ SuperSense technology, which can track extremely weak GPS signals to -160 dBm as well as the Kick Start feature for a fast Time-to-first-Fix at weak signals, according to the company.

Proprietary anti-jamming algorithms help make the products immune to noise generated by the PC bus, mobile phones, and local electronic devices. The drivers support Windows XP and Windows Vista. A driver for the upcoming Windows 7 is in preparation. The PCI-5S and PCM-5S are now in mass production.

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Measuring 5.4 x 4.6 x 1.1 millimeters, the RAMON module includes both active and passive components in a single fully integrated package, meeting the demanding design and cost requirements of device manufacturers.

CellGuide, a Rehovot, Israel–based fables semiconductor manufacturer of highly integrated host-based GPS/GNSS receivers, has introduced the RAMON GPS module.

Measuring 5.4 x 4.6 x 1.1 millimeters, the RAMON module includes both active and passive components in a single fully integrated package, meeting the demanding design and cost requirements of device manufacturers.

The RAMON module contains CellGuide’s ACLYS chip and an RF chain, which together with its associated host-based software, is targeted at mass-market device manufacturers.

RAMON operates both autonomously and in assisted-GPS (AGPS) mode with -160 dBm sensitivity and a power-management design that reduces power consumption to less than 10 milliwatts in tracking mode, according to the company.

CellGuide has integrated its solutions into a broad range of third party ARM/DSP-based processors including those made by Freescale Semiconductor (MX series), Marvell (PXA series), NEC Electronics (MP series), Samsung Electronics (S3C24xx, S3C64xx), TI (OMAP), and others.

The ACLYS host-based software runs on a wide range of operating systems, including Windows CE, Windows Mobile, Symbian, eLinux, Thread-X, Nucleus, and u-Cos.

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One change that apparently won’t happen under the Obama administration is replacing the federal gasoline tax with a GPS-monitored mileage fee.

In an interview with the Associated Press last week, U.S. Department of Transportation (DoT) Secretary Ray LaHood had suggested that his agency should look at a “vehicular miles program where people are actually clocked on the number of miles that they traveled.”

It was one of the shortest flights of a trial balloon so far this year.

One change that apparently won’t happen under the Obama administration is replacing the federal gasoline tax with a GPS-monitored mileage fee.

In an interview with the Associated Press last week, U.S. Department of Transportation (DoT) Secretary Ray LaHood had suggested that his agency should look at a “vehicular miles program where people are actually clocked on the number of miles that they traveled.”

It was one of the shortest flights of a trial balloon so far this year.

When asked at his February 20 news briefing about the mileage fee concept and whether President Obama had “weighed in” on the subject, White House press secretary Robert Gibbs said, “I don’t believe the President has. I can weigh in on it and say that it is not and will not be the policy of the Obama administration.”

A number of states and regions have explored the idea of replacing or supplementing the local gas taxes with systems — frequently employing GPS-based methods — that log and assess fees based on actual mileage driven. The motives for implementing such plans typically include reducing congestion on heavily traveled roads and highways or increasing tax receipts that have been fallen as Americans drive less due to high gasoline prices or use fuel-efficient cars, including electric vehicles or gas/electric hybrids.

Last year, an eight-month pilot project studying the potential for reducing highway congestion in Washington state’s Puget Sound area using GPS-based variable tolling concluded that the benefits could exceed $28 billion over a 30-year period. And last month Oregon Governor Ted Kulongoski asked the legislature to allocate $10 million to convert the state gas tax program to a mileage-based system.

Both projects will be featured at the nation’s first transportation symposium on mileage-based user fees scheduled April 14–15 in Austin, Texas. Sponsored by the Texas Transportation Institute and the University of Minnesota, the conference agenda addresses the current status of state pilot projects and mileage fee development efforts in the United States. Agenda and symposium registration information are available on-line at http://tti.tamu.edu/conferences/mbuf09/program.htm

The Traffic Choices project, conducted by the Puget Sound Regional Council (PRSC), created a virtual network of toll roads based on actual highways in the Seattle area. Vehicles from 275 households were outfitted with an on-board unit (OBU) or meter containing a GPS receiver and a display showing the toll rates for various routes. (The OBU was essentially the same as that used by Germany’s TollCollect system of assessing fees on commercial trucks.)

The OBU matched the vehicle’s position to a map of the toll-road network embedded in the meter. The meter’s display showed toll rates and a road description. The meter stored the GPS-derived coordi¬nates — at a one-second position update rate — and toll information, periodically communicating these to a cen¬tral computer using cellular wireless communications.

The rates varied depending on the time of travel and the routes chosen. The toll rate structure charged higher rates for travel during peak travel times on high demand roads.

Each household received a “travel budget” that was spent on mileage fees — with the funds remaining in the household allocation at the end of the pilot project being turned over to study participants. This provided an incentive for the participants to drive less, along less-congested routes, and at less busy times of the day. As study participants drove their vehicles on tolled roads the appropriate charges were deducted from their account balance.

The $2.35 million study was financed with grants from the U.S. Department of Transportation, Federal Transit Administration, Federal Highway Administration, and Washington State Department of Transportation. More information about the project, including various reports, can be found at the PRSC website.

In Oregon, the mileage-fee idea was tested in a 2006 pilot program deemed a “proof-of-concept” success by the Oregon Department of Transportation (ODoT).

Using a $2.1-million grant from the Federal Highway Administration, the state outfitted two service stations in the Portland area with mileage-reading technology. About 260 volunteers agree to have devices incorporating GPS receivers installed in their vehicles that logged the miles traveled (but not the actual locations). The pilot program and final report can be found on the ODoT website.

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Rx Networks, Inc., a Vancouver, B.C., Canada–based provider of assisted-GPS (AGPS) technology has announced the availability of its GPStream Secure User Plane 1.0 Light Edition (SUPL 1.0 LE) data service. The company has also announced that Infineon Technologies AG uses an optimized version of the company’s GPStream Mobile Suite to work with Infineon’s next-generation XPOSYS GPS chipset technology.

Targeting mobile handset manufacturers, location-based service (LBS) providers, and enterprise customers, the GPStream SUPL LE service enables a SUPL 1.0 AGPS–compliant device to receive real-time GPS assistance and rapidly determine its position even under weak signal conditions. The service can be licensed on a usage or a lifetime subscription basis.

“GPStream SUPL LE is a lightweight service designed to simply respond to a terminal’s request for assistance and does away with network initiated features typically found in full-blown SUPL implementations in carrier networks,” said Dave Cayer, Vice President Marketing of Rx Networks. As a result, Cayer says, GPStream SUPL LE–capable equipment can benefit from AGPS aiding even if mobile operators have not deployed a SUPL service or if their business requires operation across multiple operator networks.”

Infineon’s XPOSYS is mainly optimized for cellular phones with navigation features, according to Horst Pratsch, vice-president of marketing for mobile phone platforms for the company’s Wireless Solutions Division. By combining the extended ephemeris components of GPStream Mobile Suite with Infineon’s own SUPL 1.0 client, customers using Infineon’s GPS technology a flexible portfolio of A-GPS assistance options.

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Racelogic Ltd., of Buckingham, United Kingdom, has introduced LabSat, a one-box system designed to record and replay real-world GPS data for use in designing and validating GPS products.

Based on a in-house system developed for testing and calibrating Racelogic’s VBOX products, LabSat connects to a PC via USB 2.0 and records raw signals from a GPS antenna directly to hard disk, without limitations on the number of satellites being tracked or the length of the recording. VBOX is a GPS-based system for measuring the speed and position of a moving vehicle in performance and brake testing.

According to the company, when the logged data is replayed, a GPS receiver will recreate the movement and satellite reception encountered during the test, including all original multipath, satellite obstructions, and atmospheric effects.

Options include LabSat Signal Architect software can simulate dynamic scenarios without the artifacts of real-world data and optional IMU modules that enable users to record data from inertial sensors and replay them synchronized with GPS data.

LabSat comes bundled with a 250 GB USB drive and pre-loaded recordings. Prices begin at £5,950 (US$8,470).

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Merger plans recently announced by CSR (Cambridge Silicon Radio) plc and SiRF Technology Inc. connote more than the evolving fortunes and common future of a Cambridge, UK–based Bluetooth and WiFi provider and a San Jose, California GPS manufacturer.

It reaffirms the emergence of mobile phone handsets as a dominant location platform, the convergence of wireless communications and positioning at the chip level, and the trend toward absorption by semiconductor manufacturers of independent GPS technology providers who offer only single-frequency solutions.

Merger plans recently announced by CSR (Cambridge Silicon Radio) plc and SiRF Technology Inc. connote more than the evolving fortunes and common future of a Cambridge, UK–based Bluetooth and WiFi provider and a San Jose, California GPS manufacturer.

It reaffirms the emergence of mobile phone handsets as a dominant location platform, the convergence of wireless communications and positioning at the chip level, and the trend toward absorption by semiconductor manufacturers of independent GPS technology providers who offer only single-frequency solutions.

It may also signal the failure — at least for the time being — of software GPS receivers to gain traction in mass market applications, the double-edged nature of lawsuits that can cut two ways, and the importance of cash reserves in an era when banks have sharply curtailed lending.

But first the news.

On February 10, CSR and SiRF announced plans to merge the latter company into the former in a pure stock deal, rather than a cash-out acquisition. SiRF shareholders will receive 0.741 of an ordinary share in CSR for each SiRF share, which values SiRF at approximately $136 million (£91 million).

That’s a premium of approximately 91 percent on the closing SiRF share price of $1.08 on 9 February 2009, and a premium of approximately 57 percent over the average closing SiRF share price over the prior three months. Following completion, SiRF shareholders will own approximately 27 percent of the enlarged CSR group.

Formally, SiRF will merge with a newly organized U.S. subsidiary of CSR. Completion of the merger is subject to the approval of both SiRF and CSR shareholders, clearance by regulatory agencies, and certain other conditions. CSR anticipates a one-time integration expense of $15 million.

Glen Gibbons is editor and publisher of Inside GNSS magazine, which covers the policies, programs, engineering, and most challenging
applications of the Global Navigation Satellite Systems: GPS, Galileo,
GLONASS, Compass/ Beidou, and related technologies. He bills himself as the "oldest living GPS journalist." Gibbons lives and works in Eugene, Oregon, USA.

SiRF’s interim CEO, Dado Banatao, is expected to join the CSR board as a non-executive member, and Kanwar Chadha, a SiRF founder and vice-president of marketing, as an executive director — that is, Chadha will become part of the post-merger CSR senior management. Both Banatao and Chadha have committed to vote their shares in SiRF — about 4.8 of the company’s issued share capital — in favor of the merger.

Both companies bring strong brand equities and market share (though less now than in the past) to the table. CSR, with a focus on handset manufacturers, says it ranks first in every Bluetooth market segment with a unit market share in excess of 50 percent.

The company also has a range of other “connectivity” technologies — FM, WiFi, ultrawideband (UWB), and near field communications (NFC) — in various stages of development that CSR groups in its Connectivity Centre.

WiFi is furthest along, with CSR’s third-generation UniFi6000 now sampling with customers. It has demo chips for its NFC offering. UWB is an active project with a small team behind it, but is part of CSR’s PC group, not its handset business.

The company has also introduced CSR Synergy, a wireless system software that enables customers to adopt a growing complement of wireless connectivity technologies. CSR estimates that the combined annual market for these technologies will grow from $3.5 billion in 2008 to between $5 and $7 billion by 2012.

SiRF, probably the industry’s most ambitious promoter of consumer GPS since its founding in 1995, has its SiRFstarIII chip technology embedded in leading portable navigation devices (PNDs), cell phones, and other mobile devices sold by such companies as Research in Motion (Blackberry), Mio, MiTAC, Pharos, and Motorola.

The CSR-SiRF merger will allow the companies to bring their new story to a high-profile industry event for a key market: the GSMA Mobile World Congress 2009 this week (February 16–19) in Barcelona, Spain. Indeed, on the first day of the congress, CSR unveiled its CSR9000, a which the company says will support 60-square-millimeter (or smaller) modules combining Bluetooth, Bluetooth low energy, Wi-Fi (IEEE 802.11a/b/g/n), FM receive and transmit, and GPS.

Reversal of Fortunes
The announced transaction came near a recent nadir in the prospects of both companies — at least as measured in market capitalization and share value.

Just over two and half years ago, both SiRF and CSR were flying high. On May 11, 2006, CSR’s share value reached £15.22, then worth about US$28.65. Less than a month earlier, SiRF stock had peaked at $39.15 per share. By last November, however, CSR stock had dropped to £1.52 (US$2.26); on October 31, 2008, SiRF shares traded at $0.94.

Last week’s announcement has been good for both companies: on February 13, SiRF closed at $2.04, nearly double its price a week earlier; CSR closed the same day at £2.10 (US$2.99), up from just under £1.80 the day of the merger announcement.

The companies needed some good news.

CSR reported revenue of $140 million for fourth quarter 2008 (down from $205.5 million in the third quarter) and $695 million for the full year. The company had an operating loss $8.5 million compared to a 2007 profit (before tax) of $150.1 million on revenue of $848.6 million.

In a February 10 conference call with analysts, CSR CEO Joep van Beurden cited the global economic downturn and customers’ reduction of inventory as the main causes for the weakening performance and predicted that “2009 will be tough for all businesses.”

“In Q4 new orders were very low and we had a lot of requests for ‘push-outs’ [in order delivery dates] and cancellations,” van Beurden said. “The latter have now diminished and returned more to normal.”

As for SiRF, in the fiscal year ended December 27, 2008, using general accepted accounting principles (GAAP), the company had revenues of $232 million (compared to $329 million the previous year). Net loss before provision for income taxes was $360 million (versus 2007 loss of $6 million). This loss included a goodwill impairment charge of $216 million and an acquisition-related asset impairment charge of $43 million. After adjusting for these and certain other items, SiRF had a non-GAAP net loss of $36 million (compared to a non-GAAP profit of $60 million in 2007).

In the conference call, van Beurden underlined the positive, noting that the companies would have had pro forma combined revenues of $927 million and a pro forma $378 million in cash on hand at the end of fiscal year 2008. He said that CSR also expects at least $35 million in annual cost synergies will be achieved within 60 days of the merger closing. Approval of CSR and SiRF shareholders will be sought at a general meetings expected to take place in May or June 2009.

The parallel reversal in fortunes arose from both internal and external developments.

In their market-cap heyday, CSR and SiRF made a series of acquisitions designed to bolster their technology portfolios, particularly in the — respectively — GPS and Bluetooth expertise that they needed.

In January 2006 SiRF bought Impulsesoft Pvt. Ltd., a Bluetooth-embedded software company in Bangalore, for US$15 million in cash and stock. But the acquisition never led to products that caught fire in the marketplace.

SiRF also bought TrueSpan in March 2006 to acquire the latter company’s mobile digital audio and video technology, which it planned to leverage into a mobile television chip. A little more than a year later, SiRF paid $283 million in a combination of cash and shares to buy Centrality Communications, a Redwood City, California, company to add multimedia and system-on-a-chip (SoC) capabilities.

At the 2008 Mobile World Congress SiRF rolled out its SiRFprima multifunction platform, which exploited the Centrality technology by integrating a GPS/Galileo location engine with multimedia and 3D graphics capabilities and extensive peripheral support. However, at the last minute, the company canceled plans to launch SiRFTV, a mobile television chip that would have connected with SiRFprima.

On the GPS front, SiRF lost its exclusive supplier relationship to leading PND manufacturer TomTom in late 2006 when the Dutch company announced plans to switch part of its product line to Global Locate. In the wake of TomTom’s move, SiRF soon filed a lawsuit in U.S. District Court charging patent infringement by Global Locate, Inc., which was acquired in a $143 million cash deal the following year by Broadcom Corporation.

The case is set for trial late next year, and van Beurden said CSR’s “assessment of our risk in district court is factored into the valuation of SiRF.”

Global Locate (later Broadcom) subsequently filed a complaint in the U.S. International Trade Commission (ITC), alleging patent infringement and seeking a halt to SiRF’s importing chips, as well as imports of SiRF chips by customers. The ITC recently issued final a determination that applies the import ban to SiRF and four named customers: Pharos, Mio, MiTAC, E-TEN.

Van Beurden told the stock analysts that “SiRF has work-arounds for most patents; so, SiRF’s business should continue without material disruption.” He declined to elaborate on what the work-around are.

Meanwhile, the recent slowdown in consumer spending has put PNDs on the “bleeding edge of that trend,” says Chadha. Despite a similar slowing in growth of handset sales, the increasing rate of GPS penetration in mobile phones still makes it an expanding market for GPS suppliers such as SiRF. Although global handset shipments are expected to drop by 4–5 percent in 2009, according to a January report by ABI Research, GPS-enabled phones will climb to 240 million units, an increase of 6.4 percent over 2008.

However, a strong push by Texas Instruments (TI) and other wireless semiconductor companies (e.g., Broadcom) into the mobile phone location marketplace began to erode SiRF’s market share in recent years, a situation worsened by turmoil at Motorola, an early SiRF customer for handset GPS. TI obtained a strong position providing GPS chips to leading handset manufacturer Nokia.

In its efforts to come up with an in-house GPS capability, CSR sought to solve its GPS technology needs by acquiring Swedish start-up NordNav Technologies AB in January 2007, for $40 million. NordNav had developed a software GPS receiver as well as a GPS/Galileo simulator.

Almost simultaneously CSR bought nearby Cambridge Positioning Systems Ltd. (CPS) for US$35 million. CPS had developed an assisted-GPS (AGPS) technology that could also provide a cellular network–based positioning solution — with both capabilities bundled as Extended GPS (eGPS).

The Market Waits for No One
Although their previous GPS and Bluetooth acquisitions showed up in some product designs, neither company felt that they had developed a winning combination in-house.

“Given enough time, we could have developed a good Bluetooth solution,” Chadha told Inside GNSS.

But time was something that the companies didn’t have. Bluetooth technology was becoming increasingly commoditized with a corresponding decline in margins on Bluetooth-only products. Leading handset manufacturer Nokia had become increasingly open about its plans to incorporate GPS into more of its phones along with the connectivity technologies.

Meanwhile, the wireless convergence trend continued to accelerate. TI and Broadcom launched combined GPS/Bluetooth/FM chips last year.

On February 16, Skyhook Wireless announced at the Mobile World Congress that TI will use Skyhook’s hybrid GPS/WiFi positioning technology in its mobile chips target for handsets.

Skyhook’s technology is used today on Apple’s iPhone, among other services and devices. (Indeed, SiRF licensed the Skyhook’s WiFi positioning technology two years ago for incorporation into its SiRFstarIII platform.)

By mid-2007 CSR was already looking for prospective partners that had a stronger GPS technology but lacked a solid Bluetooth offering, according to Stuart Strickland, former vice-president of CSR’s location based services strategic business unit. The first substantive contact with SiRF came in December of that year in discussions around a specific joint product development project.

“About a year ago, SiRF saw two things happening,” Chadha told Inside GNSS. “The economy began slowing down and customers became more cautious. Customers didn’t want to try new things; they wanted to go with proven solutions.”

By early 2008, lack of headway in developing their separate GPS/Bluetooth combinations led the companies to expand the conversation to potentially joining their businesses together. In fact, Tim McCarthy, director of SiRF’s wireless marketing group, reportedly dubbed the collaboration, BOB — the best of both.

Strickland says that SiRF was favored by one of CSR’s important customers, and another GPS acquisition/merger prospect was backed by another customer. Over the last four to five months, however, the conversation deepened and went in SiRF’s direction, leading to the February 10 announcement.

The Way Ahead
Assuming the merger goes through, van Beurden said that the companies will be fully engaged in cross-selling their customers by next year and bringing out their first “combined product roadmap — silicon jointly developed” by 2011.

The companies share many customers, he said, but offer them different products. With access to the SiRF IP, CSR would have more than 200 GPS-related patents.

During the rest of 2009, van Beurden said the companies will take advantage of cost reductions previously announced in 2008 for SiRFand CSR of $35 million and $25 million, respectively, in addition to the $35 million in cost synergies expected with the merger.

Chadha identified TI and Broadcom as its main direct competitors in the handset markets and, to a lesser extent, Atheros Communications (which acquired u-Nav in late 2007). He characterized Qualcomm as an indirect competitor because its convergent wireless approach focuses more on the modem rather than chip-level integration.

Another prospective competitor is the recently completed 50/50 joint venture that united the wireless semiconductor division of STMicroelectronics and the mobile platform division of Ericsson, which will move forward as ST-Ericsson. Announced in August 2008, the agreement between the parent companies merged Ericsson Mobile Platforms and ST-NXP Wireless. The latter company had been formed earlier that year, shortly after NXP had acquired GPS technology supplier GloNav, Inc.

As an outside observer who had an insider perspective until he left CSR last December, Strickland believes that both companies will benefit from (and needed) the merger, but will bring new challenges to old ways of thinking.

“Having a strong and proven team with outside expertise [SiRF] will be healthy” for an engineering-driven CSR, he told Inside GNSS, “and it will pose a challenge to SiRF’s culture to have people other than the founders in charge.”

Although the NordNav technology may continue to play a role in CSR product development, the engineering team from that acquisition will probably be absorbed into other efforts, predicted Strickland, who had joined CSR with the NordNav acquisition where he had responsibility for strategic planning. Chadha’s comments seemed to suggest the same.

“People underestimate the challenge of the software solution,” said Chadha. “If you go too soft, you use a lot of processing power. You end up trying to use a large machine to do a very specific task” — signal processing to achieve a position fix. “That conflicts with the power requirement and shortens battery life.”

SiRF has moved the navigation algorithm onto the host, but that requires relatively few interrupts of the CPU operation. “But if you try to move the whole signal processing onto the host, that’s very inefficient,” he added.

After a merger, CSR “will have to go through a process of rationalization of technologies,” Chadha told Inside GNSS. “It will have to make some tough decisions.”

As for the eGPS solution brought over from CPS, Chadha said that it will fit will under the company’s multimode platform umbrella.
Chadha, who long served as SiRF’s “visionary-in-chief,” seems likely to play a similar role at CSR. He sees the future location platform as an all-purpose “mobile Internet device that is not a computer, but a computer; not a phone, but a phone; not a data processor, but a data processor; not a navigation device, but a navigation device.”

Location will be critical to give context to more activities, he said, including mobile gaming and entertainment platforms and “location-tagging every image.”

Social networking will make users “active participants with location,” providing user-generated content that can be distributed. In these developments, the “generational impact” will be substantial as younger users who have been raised on the Internet and mobile phones shape the applications of the future.

Glen Gibbons is editor and publisher of Inside GNSS magazine, which covers the policies, programs, engineering, and most challenging applications of the Global Navigation Satellite Systems: GPS, Galileo,GLONASS, Compass/ Beidou, and related technologies. He bills himself as the "oldest living GNSS journalist." Gibbons lives and works in Eugene, Oregon, USA.

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